Loral Librascope Pension Plan v. Bicoastal Corp. (In re Bicoastal Corp.)

202 B.R. 998, 1996 U.S. Dist. LEXIS 20018
CourtDistrict Court, M.D. Florida
DecidedNovember 15, 1996
DocketNo. 96-229-CIV-T-17B
StatusPublished
Cited by1 cases

This text of 202 B.R. 998 (Loral Librascope Pension Plan v. Bicoastal Corp. (In re Bicoastal Corp.)) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Loral Librascope Pension Plan v. Bicoastal Corp. (In re Bicoastal Corp.), 202 B.R. 998, 1996 U.S. Dist. LEXIS 20018 (M.D. Fla. 1996).

Opinion

ORDER

KOVACHEVICH, District Judge.

This cause comes before the Court on appeal from the Bankruptcy Court’s Order Disapproving the Amended Application for Allowance and Payment of Fees and Expenses Associated with the Queen’s Harbor Property Litigation filed by Loral Librascope Pension Plan, entered on December 19, 1995, by Chief Bankruptcy Judge Alexander L. Pas-kay. Appellant asks this Court to reverse the damages portion of the Liability Order, and remand the case with instructions that the Bankruptcy Court enter a supplemental order awarding appropriate damages to the Pension Plan for Bicoastal’s breach of fiduciary duty. This Court has jurisdiction. 28 U.S.C. § 158.

ISSUES

I.Whether the Bankruptcy Court erred in finding that Loral was not entitled to recover any damages under ERISA as a result of Clear’s breach of fiduciary duty because the bulk of the fees claimed by Loral were incurred after Loral assumed sponsorship of the Plan and Bicoastal no longer had anything to do with the Plan.

II. Whether the Bankruptcy Court erred in finding that Loral failed to meet its burden of proof regarding the payment of the litigation costs expended to defend against lawsuits regarding Queen’s Harbor.

III. Whether the Bankruptcy Court erred in failing to award Loral prejudgment interest.

IV. Whether the litigation costs Loral seeks to recover are administrative claims recoverable under § 503 of the Bankruptcy Code.

STANDARD OF APPELLATE REVIEW

In reviewing bankruptcy court judgments, the district court functions as an appellate court. The district court is bound by the findings of facts made by the bankruptcy court unless it determines them to be clearly erroneous. The burden is on the appellant to show the bankruptcy court’s finding is clearly erroneous. Fed.R.Bankr.P. 8013; In re Downtown Properties, Ltd., 794 F.2d 647 (11th Cir.1986); In re Fernandez, 132 B.R. 775 (Bankr.M.D.Fla.1991). However, “if the bankruptcy court’s findings are ‘silent or ambiguous as to an outcome determinative factual question,’ ” then this court must remand the case to the bankruptcy court for further review. In re Chase & Sanborn Corp., 904 F.2d 588, 593 (11th Cir.1990).

Appellant is entitled to a de novo review in all cases where the determination is solely based on a conclusion of law. In such cases, the district court will conduct an independent review of the case and the legal significance accorded by the bankruptcy court to the facts. In re Fasano/Harriss Pie Co., 71 B.R. 287, 290 (W.D.Mich.1987); In re Goerg, 930 F.2d 1563, 1566 (11th Cir.1991); In re Owen, 86 B.R. 691 (M.D.Fla.1988).

As to issue I, this Court has been asked to determine if the Bankruptcy Court’s [1001]*1001finding that the actions of the Plan’s Named Fiduciary, Victoria Clear, did not result in any damages is a question of law which this Court reviews de novo.

As to issues II and IV, the proper standard of review is also de novo review. However, the award of prejudgment interest is discretionary, and is reviewed to determine whether there was an abuse of discretion.

FACTS AND PROCEDURAL HISTORY

Bieoastal Corporation, d/b/a Simuflite, f/k/a The Singer Company (Bieoastal) was the sponsor of its retirement plan, the Singer Master Trust (Master Trust). Under the Master Trust, Bieoastal had the authority to appoint the Named Fiduciary for Asset Management (Named Fiduciary). David Redmond (Redmond), Bicoastal’s President and Chief Executive Officer, during the time relevant to this appeal, was appointed by Bicoas-tal to be the Named Fiduciary.

In early 1990, Redmond was approached by Fred Bullard (Bullard) who suggested that the Master Trust purchase two pieces of real estate, one in Osceola County, Florida, known as the “Gateway” property, and one in Jacksonville, Florida, known as “Queen’s Harbor.” The Plan financed Bullard’s purchase of the Gateway property, taking back a note and mortgage. Bullard defaulted on the Gateway loan, and the Plan was forced to foreclose on the property. Prior to Bullard’s final default on the loan, Victoria Clear (Clear) replaced Redmond as the Named Fiduciary of Bicoastal’s pension plan.

In January, 1991, Clear contacted Richard Watson (Watson), the Plan’s enrolled actuary, to discuss whether a substantial investment of Plan funds in real estate would be prudent. Watson advised Clear that such an investment would not be wise because of circumstances existing at that time. The circumstances included Bicoastal’s pending bankruptcy, pending litigation between Bieoastal and the Defense Logistics Agency, as well as the possible existence of a funding deficiency in the Plan. Watson advised Clear that Trust assets should be kept liquid by investing only in short-term investments, and not long-term investments.

Despite this advice, and the subsequent default by Bullard on the Gateway loan, Clear, as the Named Fiduciary, executed a contract with Bullard for the Plan to purchase “Queen’s Harbor.” While the contract purported to be effective as of March 13, 1991, it is undisputed that the contract had not been drafted at that time, and Clear simply signed the last page. The final contract named Bullard and Queen’s Harbor Yacht and Country Club as the Sellers, and the Master Trust as Purchaser. The contract provided for a purchase price of $38.5 million dollars. Additionally, the Master Trust was to loan Bullard an additional $5 million dollars for development of a country club on the property. The contract provided no legal description of the property, nor did it require a deposit. Also, no interest rate, repayment schedule or other terms were specified for the loan portion of the transaction.

However, the contract did specify several conditions to be fulfilled by both Seller and Purchaser prior to closing. The Seller was required to provide a survey of the property within thirty days of the effective date of the contract, as well as title commitment at the Purchaser’s expense. Additionally, the contract provided that the Purchaser’s obligation to complete the transaction was subject to the Purchaser being able to satisfy certain conditions. These conditions included:

1. obtaining soil tests, soil borings, percolation and other feasibility tests and topographic, engineering and environmental studies showing the physical aspects and the condition of the property are acceptable to Purchaser and suitable for Purchaser’s intended use of the property;
2. determining to its satisfaction that water and sanitary and storm sewer services presently exist at the perimeter of the property and are unconditionally available to serve the property ...;
3. obtaining letters from the appropriate utility companies which will be providing [1002]

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Bluebook (online)
202 B.R. 998, 1996 U.S. Dist. LEXIS 20018, Counsel Stack Legal Research, https://law.counselstack.com/opinion/loral-librascope-pension-plan-v-bicoastal-corp-in-re-bicoastal-corp-flmd-1996.